Explainer: The President’s FY26 Budget Request and the International Financial Institutions

by Eli Whitney Debevoise II, Partner, Arnold & Porter Kaye Scholer LLP; Former US Executive Director, The World Bank Group

With the termination of USAID and an Executive Order calling for a review of all international organizations of which the United States is a member, many wondered what the President’s FY26 Budget Request for the International Financial Institutions (IFIs) would look like. The first clues came in mid-April during the Spring Meetings of the IMF and World Bank, when Treasury Secretary Scott Bessent reasserted Treasury’s leadership role on IFI matters, saying “America first does not mean America alone.” Secretary Bessent also made clear that the United States will remain supportive of the IFIs if they return to their core missions. Released in full on 30 May 2025, the administration’s Fiscal Year 2026 (FY26) Budget Proposal reflects this approach.

The request proposes authorization and funding for the United States’ contributions to the following international financial institutions:

  • Authorization and appropriations for an increase in the US quota subscription to the International Monetary Fund, as well as a corresponding reduction in the amount of the US commitment to the “New Arrangements to Borrow,” an exchange of assets that maintains a US leadership position in the IMF while avoiding a net increase in commitment by the U.S. to the IMF.
  • $1.07 billion for US contribution to the 21st replenishment of the World Bank’s International Development Association.
  • $87.5 million for shares issued to the U.S. from European Bank for Reconstruction and Development under a previously agreed to general capital increase.
  • $75 million for the US share of a capital increase at IDB Invest, the private sector arm of the Inter-American Development Bank.
  • $54.6 million for installment payments of a previously negotiated capital increase for the African Development Bank.
  • $43.6 million for the 13th replenishment of Asian Development Fund, the concessional arm of the Asian Development Bank.

For the FY26 budget, IDA20 had an accelerated two-year pay-in period, whereas IDA21 returned to a more traditional three-year pay-in period running from 1 July 2025 through 30 June 2028. This enabled Treasury to appear to reduce the IDA appropriation compared to FY25 by some $314 million, while holding the overall commitment to IDA relatively level. This ask from Treasury is under the Biden administration pledge. The previous administration pledged $4 billion for IDA spread over a three-year period, which would have kept IDA outlays at FY24 enacted levels or $1.3 billion a year, increasing the US commitment to IDA21 over IDA20 (see table below). This funding may yet be restored by the appropriators in future years if the IFIs adopt policy reforms which return the World Bank and IDA to development basics focusing on private-sector-led economic growth. 

The administration’s FY26 budget request also reiterates prior requests to include legislation that will grant to IDA the same exemption from US securities laws already enjoyed by other arms of the World Bank Group and the regional development banks. This non-controversial request results from the decision taken in an earlier IDA replenishment to permit IDA to sell securities in the global market. The exemption will permit IDA to issue debt at a lower cost relative to current levels without decreasing investor protection. On 21 July 2025 the House of Representatives passed by voice vote H.R. 1764, legislation which would enact this administration request. The bill was reported out of the House Financial Services Committee in March by a vote of 49-0.

The FY26 budget request maintains a $50 million request (equal to the FY25 request) for Treasury International Assistance Programs. This money may be used for discretional needs at IFIs and trust funds and is administered by Treasury to respond nimbly to urgent short-term needs and crises.

Finally, the FY26 request contains $30 million for Treasury’s Office of Technical Assistance, down from $38 million in FY25, although Treasury will have the opportunity to use some of this funding for OTA using funds from the proposed Treasury International Assistance Programs budget.

The request contemplates no budget for debt restructuring in FY26. In fact, it includes a rescission of $11.975 million for debt restructuring because US participation in the HIPC (Highly Indebted Poor Countries) Initiative for Sudan required less budget than programmed. The absence of a request may mean that Treasury anticipates no need for debt restructuring in FY26 for the Paris Club or bilateral US lending by the Department of Defense, Development Finance Corporation, Ex-Im Bank, or other US creditor agencies. The absence of funding here also may mean that Treasury anticipates that there will be no temporary debt suspensions by the Paris Club during the forthcoming fiscal year, as occurred during the pandemic. The same holds true for debt restructuring pursuant to the Tropical Forest and Coral Reef Conservation Act.

Featured author: 

Eli Whitney Debevoise II, Partner, Arnold & Porter Kaye Scholer LLP; Former US Executive Director, The World Bank Group